Section 153C Valid but Addition Fails: No Incriminating Material = No Deemed Dividend

DCIT Vs Arun Kumar Pillai (ITAT Bangalore) The ITAT Bangalore delivered a split ruling—upholding validity of proceedings u/s 153C, but deleting the entire addition of deemed dividend due to absence of incriminating material. The case arose from a search on Skanray group, where documents led the AO to initiate proceedings u/s 153C against the assessee and tax ₹21.64 crore as deemed dividend u/s 2(22)(e) based on loans from group companies. On the legal issue, the Tribunal noted that earlier reliance on Karnataka HC ruling in Sunil Kumar Sharma (favouring 153A over 153C) no longer holds good...